ETSI: A Case Study in Standard Setting and Capture

Abstract

This thesis analyses the problem of patent holdup in the European ICT standardisation process with regard to wireless telecommunications standards. The European standardisation system is based on a co-regulatory model involving collaboration between the European Commission and ETSI with the goal to promote innovation, competition, and consumer welfare via the promulgation of interoperability, harmonised, standards. Often however proprietors of standard essential patents (SEPs) opportunistically holdup users/implementers of SEPs. The thesis maintains that, despite existing soft-law mechanisms and antitrust measures, patent holdup is an issue that can readily recur, and attributes this to the capture of the co-regulatory regime. It shows that the soft-law mechanisms, including the ETSI IPR Policy, FRAND terms, European Commission’s Guidelines and its policy initiatives and strategies for achieving the European Digital Single Market, are insufficient to mitigate patent holdup. This thesis set out to determine whether patent holdup is a form of regulatory capture undermining the public interest rationale of standard setting. To do so, first, it frames patent holdup in theory and practice. Second, it scrutinises the dynamics of co-regulation in standard setting and how patent holdup is factored into the regulatory capture paradigm. Third, it analyses how theories of regulation, particularly agency theory, inform this assessment and therefore diagnose regulatory capture in EU ICT standard setting. Finally, the thesis investigates the possibility for ex ante regulatory and ex post competition law tools to enable policy recommendations. This analysis ultimately contributes to the scholarship with regard to the regulation of strategic and opportunistic behaviour of SEP holders. This study should, therefore, be of value to identifying effective measures to restore balance in standard setting consistent with the public interest. This becomes even more important as wireless telecommunications standards have been an intrinsic component to the formation of the European Digital Single Market.